Solar panels can be financed by homeowners who want to save money on energy or make an investment for a cleaner, more affordable electric power. The average house can save as much as $65,000 during the lifetime of their solar panel system.
Solar financing comes in many forms, each with their own pros and cons. You should know your needs before you make a decision so you can choose the right financing.
Interest-Free Solar Panel Loans
A growing number of solar panel loans come with no interest. They are subsidised by the federal and local governments to encourage more people to adopt renewable energy systems. The loans tend to be easier for those who have lower credit scores. You may also not get penalized if you pay off your loan earlier.
A home equity line-of-credit (HELOC) that uses your home's value as collateral may also be available. Solar loans are not as easily obtained as personal loans, but they can reduce borrowing costs and lock in low rates.
Buying Outright
If you have a large amount of cash to spare, purchasing a solar panel system outright is probably the most cost-effective way to go. You'll also be able take advantage any tax rebates offered by your area.
Leases and PPAs
The most popular solar panel financing option is the Power Purchase Agreement (PPA). The solar panel power rate is usually set for a period of 25 years. This is typically 10-30% less than what you would pay to the utility. This is not a guarantee, since prices can change each year.
Additionally, leases and PPAs don't grant you ownership of the solar panels, which can disqualify you from claiming the federal solar investment tax credit. It can be a problem if you want to sell the house, but need to move a leased system of solar panels.
Get A Solar Loan
There are many options available for financing solar panels, including loans through banks, credit unions and other third parties. Pay attention to the annual percentage rate, origination fees and terms of your loan. These factors will influence your total solar panel installation costs. Make sure you shop around for the best deal.
Residential Solar Finance Options
Solar loans are a popular way to finance a system. Most banks and credit unions offer this option, which is a great way to obtain the funds you need without having to make an upfront investment. A personal loan is the most likely option, and it can be easier than applying for an HELOC.